🚀 Unlocking Product Success: 5 Key Pillars for Mastering AI in Digital Products!💡A Must-Read for Product Managers, Marketing Managers, and Product Owners!
Navigating the details of the five P’s of marketing within the digital landscape presents challenges. There are plenty of frameworks, tools, and canvases available, each tailored to specific needs and poised to offer viable solutions. In our exploration, we will dive into some of these resources, analyzing their relevance to your unique requirements and discerning situations where they may not align optimally. Additionally, we will investigate how these strategies can pivot and catalyze significant growth for your business 🚀!
Drawing from the insights of a marketing expert who has been a guiding presence over the years (Steve Jobs), one profound lesson stands out: “You’ve got to start with customer experience and work backwards to the technology. You can’t start with the technology.” [1] This encapsulates the fundamental principle that customer-centricity is the cornerstone of successful marketing and technological innovations, ensuring enduring success and customer satisfaction.
For businesses, regardless of their scale (medium-sized enterprises or larger corporations), strategic approaches typically could be separated into two distinct paths: one oriented towards exploit and the other towards explore.
The explore comes with a high uncertenty and could be re-phrased as Search — Transforming entrepreneurial concepts into valuable offerings that fit customer needs, integrated within business models that are both scalable and financially viable. The exploit could be re-phrased as Grow — Scaling and developing of new businesses and or improoving or reinventing established ones. [2]
The foundational premise lies in identifying and addressing customer problems effectively. These problems could be clustered, analyzed, and then abstracted to establish generalized patterns. This initial step of problem clustering and generalization serves as a pivotal starting point in crafting strategic initiatives. Through this structured approach, companies can align their resources, capabilities, and innovation efforts to deliver targeted solutions that resonate with their customer base, thereby fostering sustainable competitive advantages in the market landscape.
In this phases of exploration and exploitation, it is crucial to collect as many customer touch points and interactions as possible in order to refine and sharpen the concept of a possible product. This product could encompass a wide range, including physical products, software solutions, or services. These interactions not only aid in fine-tuning the product idea but also contribute to developing robust strategies for its successful launch and sustained growth in the market. Furthermore the portfolio is a very usefull tool to manage the business models you would like to improve and grow. To gain a more comprehensive understanding, take a closer look into the Strategyzer book [2] — in order to better understand the principles of ‘explore’ and ‘exploit’ phases. We will now focus be on the ‘explore’ stage, specifically concentrating on the dual aspects of crafting the business design and conducting tests to validate it. This approach will allow us to carefully examine the initial phase where we ideate and shape the business concept, followed by a testing/validation phase to ensure its practicality and market fit.
🎯 #1 Use a customer centric approach and start with the problem statements
Before addressing the problem statement/hypothesis, it’s crucial to fully understand your customer segments or groups. In order to find and adress the right customer needs you have to identify the right customer groups or segments wiht the right personas (buyer and user persona). There is sometimes a significant differentce between the buyer and user persona, especially in B2B. Identifying these segments is fundamental, as they could be categorized demographically, by industry, age group, or through various other segmentation methods. This foundational knowledge is essential for tailoring your approach to the specific needs and characteristics of each distinct group as they could vary significant. Now lets take a closer look at writing problem hypothesis:
“We believe that the customer segment [customer segment] faces a challenge in [accomplishing this task or achieving this goal] due to [these reasons].”
With the hypothesis a problem statement could be derived in the following:
“For [Customer Segment] who need to [accomplish this task or achieve this goal], [this problem] represents a [quantified impact] that affects [this outcome].”
In today’s rapidly evolving markets and their constellations, the ‘time to market’ is a critical factor to consider. Particularly for AI algorithm services, launching them before they are fully perfected can be an advanteage. It’s essential to determine the optimal moment and development stage for release. Identifying the right level of feature completeness to generate noise is crucial. If the time to market is too long, the opportunity may be lost, as the initial step becomes too big. Incremental updates are often more palatable to customers, who may perceive gradual improvements more favorably than one large, overwhelming change.
🔍 #2 Validate your hypotheses to ensure they are grounded in solid evidence and a robust foundation.
So first of all, what is a good hypothesis? It describes a testable, precise and discrete topic you would like to investigate. In general there are three types of hypothesis: Feasible, Desirable and Viable. They should be mapped according to their type as well as in four quadrants, wehre on the x-axis from having evidence tot eh right seide where there is no evidence. The y-axis ranges from bottom unimportant to top important. Concentrate on the top left in order to sharp them more with the team and on the top right in order to test them as individual experiments. For the experiments it is very imortant to align with the team beforehand what is needed to gain evidence on the individual hypothesis. It follows that the following questions should be answered and agreed on:
- What should be done? — Customer Interview, Search Trend Analysis, …
- Deadline, Duration, Who takes care?
- What is needed to gain the evidence? — Interview 20 customers, perform a trend analysis with google analytics, …
- Measure a specific metric. — Top customers, local search volume, time to create, …
- Define a creteria. — We are right if 80% of, search volume is above, …
Let’s concentrate on assessing the robustness of the evidence. By evaluating the strength of the evidence, we can extract valuable insights and learnings from our observations and experiences. Furthermore, the indivdual hypothesis should be rankend according to their risk. With this combined we could now sketch the individual confident levels of each hypothesis and prepare everything for the decission. At the decide cornerpoint, a methodical analysis is conducted. Following this thorough review, a decision is made on whether to cancel the hypothesis, pivot, or continue to support it based on the strength of the evidence gathered. This critical step ensures that strategic decisions are done on a specific evidence and careful consideration. [3]
💎 #3 Value proposition — The key to success!
With this done, now shift our attention to the detailed job profile within the Value Proposition Canvas. When adressing multiple customer segments/groups — create a value proposition canvas for each segment/group. This enables a targeted approach to uncovering the specific customer pains, gains, and jobs by conducting focused customer interviews and interactive workshops. This process is instrumental in aligning your value proposition with the actual needs and experiences of your customers. Last but not least the jobs, pains and gains could be prioticed or sorted by relevance accordingly from bottom (lease) to top (most). A tip regarding defining pains and gains is to add the boundary as well as the risk as they could be seen vise-verser. Regarding the jobs to be done — ask as many why questions as long as you understand the customers job. [4]
Let’s delve into the value map on the left-hand side. Here, we’ll firstly list all products and services together before we break them down into two key clusters:
- Pain Relievers: They help customers eliminate undesired outcomes, obstacles, and risks. Example: 24/7 Customer Support: eliminate customer frustration by this service.
- Gain Creators: They create expected or desired outcomes and benefits for our customers. Example: Efficient Workflow Tools: Boost productivity and save time. [4]
The clusters within this framework can be strategically organized in ascending order of significance, with the uppermost part representing the highest priority. This canvas should be regarded as dynamic, reflecting the evolving nature of customer challenges and benefits over time. It is designed to be flexible, allowing for seamless updates and expansions. To maintain clarity on the progression, it is advisable to version each stage, documenting the changes and the rationale behind them.
This canvas serves as an effective tool for initiating price determination, utilizing either empirical analysis of current market offerings or direct customer interviews. Various methodologies, such as Van Westendorp Price Sensitivity Meter and Conjoint Analysis, facilitate this process. It’s important to note that pricing strategies may differ across various customer segments, reflecting their unique needs and value perceptions.
Once the price and the pricing strategy (like Good Better Best, Cost-Plus Pricing, Dynamic Pricing, Bundle Pricing, …) is established, it becomes a guiding factor for defining the cost structure and selecting appropriate technologies. While it’s possible to choose the technology beforehand, determining an optimal pricing strategy afterward can be challenging due to margin considerations and boundaries. The Business Model Canvas in the picture below helps in getting everything important related with the business case on one singel page.
🚀 #4 Engage extensively with early adopters and pioneers.
They are instrumental in refining your proof of concept and advancing your prototypes. Their active involvement is key to create the solutions, and they possess the resilience to view setbacks not as obstacles, but as stepping stones to success. Furthermore engage as well with critical voices, there has to be a balance between fans and critical voices in order to craft the best possible solutions for your customers.
Initiating early engagement with customers and adopting an iterative approach to developing digital solutions offers substantial advantages. Through various customer touchpoints and interactions — such as surveys, interviews, landing pages, and in genearal marketing initiatives — we gain invaluable insights into customer priorities and their focus on our solution. This understanding is crucial for prioritizing our product roadmap, refining our strategic vision, and contemplating the potential evolution of our product or service.
The image above effectively outlines the two principal stages of the process: design and testing. Each of these stages is further segmented into various sub-phases.Numerous iterations are undertaken before arriving at the final solution. As previously mentioned, it is very important during these phases to actively involve customers. Their feedback is vital in shaping the development of the solution.
📊 #5 Track the Essentials
It’s vital to monitor your marketing initiatives and understand your beta customers’ interactions with your product or service. This is particularly important for AI digital services, where it’s essential to observe and comprehend the customer usage patterns. Discovering how, when, and why customers engage with the service provides invaluable insights. Additionally, it’s fascinating to analyze the types of data customers input into the AI algorithm. This helps ensure that the beta users are providing the expected data, aligning with both your vision/hypthesis and the algorithm’s design.
When it comes to marketing activities, the concept of the marketing funnel becomes important and interesting. It involves a detailed analysis of the funnel’s various stages and the corresponding conversion rates. It’s crucial to establish beforehand the precise metrics for measuring the different stages and conversion rates. This approach is elaborated in the book “Marketing 4.0”. [5] For a practical illustration, refer to the example on the right-hand side.
The above shows a marketing funnel, where the journey commences with a search and ends in a referral. For technology companies, a conversion rate ranging from 7% to 10% from initial awareness to final advocacy is considered a strong performance metric.
Thank you for reading. Stay tuned for upcoming articles that will dive into specialized topics related to product management, product ownership, and marketing leadership.
Literature
[1] Got a technology question? Steve Jobs still has the answer.
[2] The Invincible Company: How to Constantly Reinvent Your Organization with Inspiration From the World’s Best Business Models; Volume 4 — The Strategyzer Series; Alexander Osterwalder, Yves Pigneur, Alan Smith, Frederic Etiemble; John Wiley & Sons, 2020; ISBN1119523966, 9781119523963
[3] Testing Business Ideas: A Field Guide for Rapid Experimentation; Volume 3 — The Strategyzer Series; David J. Bland, Alexander Osterwalder; John Wiley & Sons, 2019; ISBN1119551447, 9781119551447
[4] Value Proposition Design: How to Create Products and Services Customers Want; Volume 2 — The Strategyzer Series; Alexander Osterwalder, Yves Pigneur, Gregory Bernarda, Alan Smith; John Wiley & Sons, 2014; ISBN1118968050, 9781118968055
[5] Marketing 4.0: Moving from Traditional to Digital; Philip Kotler, Hermawan Kartajaya, Iwan Setiawan; John Wiley & Sons, 2016; ISBN1119341205, 9781119341208
